Beverly Hills-based developer Regent Properties just added another project to its already busy schedule for the year.
The city of Burbank’s redevelopment agency selected Regent to build a retail/office project in downtown at the former police headquarters site.
Regent’s proposal for the three-acre site calls for about 180,000 square feet of class-A office space, 25,000 square feet of retail space and an art-house cineplex. Glendale-based architectural firm Feola Carli & Archuleta designed the project, called Burbank Metropolitan Plaza.
Bob Tague, Burbank’s community development director, said the city selected Regent’s submission from seven proposals because it had the strongest potential to “bring some activity to that side of Olive” Avenue and bolster the city’s tax revenue.
Regent and the city still have to purchase some of the site, which in addition to the vacated police headquarters contains a small office building and Masonic temple. Tague said he hopes the project can have its development agreement and building approvals within six months.
Regent is completing construction on its Glendale Marketplace retail project and its 600,000-square-foot West Hills Corporate Village office park. It is also working through the permitting process to build an entertainment/retail project in Westwood Village and has an office/retail project planned for Hollywood.
Betting on downtown
One of the first major office building sales of the year took place last week in downtown L.A., a market that some observers predict will be the next source of investment activity.
A partnership led by Starwood Capital Group was selected as the winning bidder to buy Figueroa Plaza I & II, two office towers with a combined 650,000 square feet of space.
The Connecticut-based investment fund paid more than $77 million or about $120 per square foot to buy the buildings from Lexington Commercial Holdings. The deal is expected to close in March.
Raffi Cohen, the building’s original developer, is also a member of the buyer group, according to sources. Officials from Starwood and Lexington, which is headed by airline leasing mogul Louis Gonda, could not be reached for comment.
Starwood, which is headed by financier Barry Sternlicht, has a national portfolio of office, apartment and hotel holdings. It also has a large stake in Starwood Lodging Trust, which recently purchased ITT Corp. after a bitter battle with Hilton Hotels Corp.
Drew Hild of Beitler Commercial Realty Services, who represented Lexington in the deal, said bidding for Figueroa Plaza was “fierce” among real estate investment trusts and private investors.
“Everyone is banking on the recovery of downtown,” Hild said. “Prices have moved (upward) everywhere else, and downtown is one of the last markets with high-class product and available space.”
Nonetheless, some real estate observers say Starwood overpaid for the building. They note that the current rental stream will be insufficient to cover the new owner’s mortgage payments, which means the investor group is betting on future rate increases as the downtown market tightens.
“It’s a risky purchase,” said veteran downtown broker Steve Bay, a senior vice president at Julien J. Studley Inc. “There’s a lot of competing class-A space for tenants it’s still a soft market.”
Downtown had an overall vacancy rate of about 23 percent for the fourth quarter, virtually static from the third quarter, according to Cushman & Wakefeld of California Inc.
The red-granite towers north of the Bunker Hill district are about 98 percent leased, with the city of Los Angeles and law firm Lewis D’Amato Brisbois & Bisgaard being the largest tenants. The city signed a 275,000-square-foot, seven-year lease at the building last year to temporarily house some of its staff while City Hall undergoes rennovations. The city has several options to terminate its lease early, according to Brad Cox, a senior managing director at Cushman & Wakefeld who handles Figueroa Plaza’s leasing.
Suburban offerings
After months of rumors, two noteworthy suburban properties are officially up for sale.
Marketing packages went out last week on the Prudential HealthCare campus in Woodland Hills, two one-story buildings with a combined 450,000 square feet of space. Prudential intends to lease back the west building once the complex is sold, according to Mark Williams, senior vice president of Secured Capital Corp.
Prudential developed the campus itself as an owner-occupant, but decided to sell after signing a 300,000-square-foot lease at the Garland Center building in downtown L.A. last year.
Farther north, the first independent studio built from the ground up in L.A. County in the past 50 years is officially on the block. The owners of Santa Clarita Studios are asking $15 million for the 110,000-square-foot facility.
Herman David, who designed the facility and is one of three co-owners, said they are selling so that he can transition into semi-retirement as a film consultant.
“I really enjoyed the business there were so many different personalities and productions coming through, but it’s time to move on,” said David, who had been a studio manager at 20th Century Fox Film Corp. before deciding to open his own studio.
The facility, located in the Valencia Commerce Center, is where the television show “Melrose Place” and feature film “True Lies” were produced. The six-sound-stage studio is undergoing an expansion, with two 16,000-square-foot stages being added, according to Dave Maron of Maron Commercial Inc., who along with Craig Peters of CB Commercial Real Estate Group Inc. is representing the seller.
Oil field metamorphosis
Santa Monica-based residential developer New Urban West Inc. has closed on its purchase of an 11-acre oil field in Long Beach, where it intends to build 60 luxury homes.
The property, located at the intersection of Bellflower Boulevard and Colorado Street, has been an oil field for the past 50 years and is still producing today.
New Urban cobbled together the land from 30 different owners, but each individual parcel was already zoned for housing, according to Adam Browning, director of acquisitions.
The property, about a mile from the posh Belmont Shores neighborhood, is within Long Beach’s Redevelopment Zone. New Urban must complete assemblage of the site, negotiate a development agreement with the redevelopment agency and clean up environmental hazards on the site before it can proceed with construction.
The developer plans to build detached homes ranging from 2,000 to 3,200 square feet and priced at about $400,000, according to Tom Zanic, vice president.
New Urban currently has a 300-unit residential development under construction in West Hills.
Joyzelle Davis covers the real estate indusry for the Los Angeles Business Journal.
